HUD/PPP loan

ID Status Date Public/Private Industry AHACPA Contact
#14749 Closed public Multifamily Les Sparks
Customer Reply

I am working on a property audit, where the management company received a PPP loan using the payroll for this property.  They disbursed the funds to the properties and treated it as a loan to the management company.

A couple of thoughts/questions.  Number one i would think this would not be a loan because the property isn’t contractually liable for this loan.  If so, it would be a HUD/compliance finding.  If the funds were forgiven, i would think this would be treated as other income for 2020.

Has a determination been made on how to treat this?

Les Sparks

Cristy, almost everyone who pushed these liabilities does to the project recorded a liability – of some type. Many have it as a due to management company. The real trick is deciding when and how to record the revenue.

The AICPA gave everyone 3 choices to recognize revenue. I have attached that guidance.

Now to the specific questions. IT is not really a loan, but more a of a payable pending forgiveness. I do not bel9ieve this payable should be included in the surplus cash calculation as liability.

When they decide to recognize the revenue I would use account 5990 and give it a good description.

Les Sparks

Customer Reply

But wouldn’t it be an unauthorized loan? 

Les Sparks

Well, it is not really a loan to the project if the management company got the loan. IF they had not decided to share the benefit, it would not be related to the project at all. Further, there was not requirement to share the benefit. Most people only look to the loan issue if the project actually received the loan.

Les Sparks

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